Grayscale withdraws Ethereum Futures ETF application due to regulatory uncertainty
Grayscale recently withdrew its proposal to list an exchange-traded fund (ETF) pegged to the price of Ether, according to a notice from the Securities and Exchange Commission (SEC).
Graycale's ETF was supposed to be listed on NYSE Arca before regulators made decisions on similar filings by asset manager VanEck, ARK Investments/21Shares and others.
Ether ETF Faces Scrutiny
According to Reuters, the decision has raised concerns among asset managers, who anticipate that the SEC may reject their applications after meeting with regulators. Last October, several investment management firms launched futures-based ETFs linked to the value of ethereum, marking a major milestone in the U.S. cryptocurrency investment space.
Grayscale joined the bandwagon, filing an ETF application in September, looking to capitalize on the expanding demand for cryptocurrency investment products. However, the outcome of its deliberations is uncertain following a delayed decision by the SEC.
Additionally, Grayscale's application to convert its existing Grayscale Trust into a spot ethereum ETF is pending approval. The company argued that the SEC's approval of an ethereum futures ETF sets a precedent for approving ETFs tied to the spot price of cryptocurrencies, given the inherent relationship between the futures and spot markets. However, the firm's withdrawal of its Ether Futures ETF application highlights the regulatory hurdles.
Challenges for Cryptocurrency Investment Firms
Grayscale's withdrawal of its Ether Futures ETF proposal reflects the ongoing regulatory challenges faced by cryptocurrency investment firms. While the SEC has yet to make a decision on Grayscale's ethereum spot ETF application, its broader implications extend to investors in the evolving cryptocurrency market.
In March of this year, Grayscale filed an application to list a new "mini" version of its Grayscale Bitcoin Trust (GBTC) exchange-traded fund (ETF), Finance Magnates reports. The move, which aims to provide investors with tax-free bitcoin investments, marks Grayscale's strategic expansion into cryptocurrency investing.
If approved, the trust will be listed on the New York Stock Exchange under the ticker symbol "BTC" as a separate entity from Grayscale's main GBTC fund. As part of the arrangement, shares of the new bitcoin trust will be distributed to existing GBTC shareholders, with GBTC contributing an undisclosed amount of bitcoin to the trust. The announcement comes amid a surge in the price of bitcoin, which reached an all-time high of $71,415 on March 11th.
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